A projectile was fired Tuesday at the offices of the Iraqi Foreign Ministry (search), causing a large explosion but no casualties, witnesses said. Iraqi guards fired rifles in the air shortly after the midmorning blast.

Five U.S. Army Humvees and two armored personnel carriers sped to the scene in western Baghdad, and several streets in the area were sealed off. The U.S. military press office said it was aware of "a situation" at the Foreign Ministry but had no details

Witness Hussein Amin said the projectile -- either a rocket-propelled grenade or a mortar -- apparently exploded in the ministry compound, causing minimal damage but sending employees streaming out of the offices, located about a half mile from the palace headquarters of the U.S.-led coalition.

The ministry is also about a half mile from the Al-Rasheed Hotel (search), where many U.S. officials live. The hotel was attacked by small rockets or rocket-propelled grenades on Sept. 27, causing no casualties and minimal damage.

Security was already tight in the palace area because of demonstration Tuesday by about 2,000 former employees of the Iraqi intelligence service who are demanding they get their old jobs back.

The intelligence officers have been protesting weekly to demand pay or their old jobs back. After the protest, paving stones littered the street near the palace and the strands of concertina wire which provide security in the area had been flattened by the protesters.

In southwest Baghdad, U.S. soldiers in about 20 Humvees with two helicopters overhead confronted some 600 demonstrators at a Shiite Muslim (searchmosque, with protesters claiming the Americans had illegally detained their imam.

Sheikh Mohammed al-Sudani said mosque preacher Moayed al-Karzraji was arrested Monday as he lead a 12-man delegation to negotiate with the Americans in the municipal council building.

The group was briefing detained and handcuffed by soldiers, al-Sudani said. Everyone in the group was released, he said, but the imam who was taken to an unknown location.

It was not immediately clear what negotiations were planned.

The military said it was checking on the arrest allegations.

Al-Sudani accused the Americans of putting hand grenades in the mosque on Monday as a pretext for arresting the imam and sealing the building.

Protesters shouted "America equals Saddam" and "Today we are raising banners tomorrow we will raise weapons."

According to one of the organizers, the protesters plan a sit-in until al-Khazraji is released.

Last week, U.S. soldiers fired warning shots over the heads of stone-throwing Shiites outside al-Karzraji's mosque after the cleric was questioned by U.S. and Iraqi authorities for allegedly inflammatory sermons.

Shiites, the majority of Iraq's 25 million people, have been generally more accepting of the U.S. occupation than Sunnis, the foundation of the former regime. Many Shiites opposed Saddam because of his bloody crackdown on a Shiite uprising after Iraq's defeat in the 1991 Gulf War.